NEHAWU response to the statement by President Cyril Ramaphosa on further economic and social measures in response to Covid-19 epidemic
22 April 2020
The National Education, Health and Allied Workers’ Union (NEHAWU) notes the economic and social measures announced by President Ramaphosa to the nation last night.
The impact of the combined global capitalist crisis and COVID-19 pandemic is likely to plunge all regions, including Africa, into recession as forecast by the International Monetary Fund (IMF). In the last few months since the outbreak of COVID-19 the developing economies, including South Africa, have witnessed massive capital outflows.
In South Africa, we are in a worse predicament as our economy was already pushed into a technical recession when the Coronavirus outbreak was announced. This is the third technical recession since the start of the implementation of the misguided austerity programme in 2015 - that has failed to achieve its targets in terms of reducing the budget-deficit and public-debt. The Treasury’s current Medium Term Expenditure Framework (MTEF) announced during the Budget Speech by Tito Mboweni disgracefully departed from the macroeconomic framework outlined in the 2019 ANC election manifesto.
With deep fiscal cuts particularly singling-out the public service workers under the Public Service Coordinating Bargaining Council (PSCBC) and other social cuts such as in public railway transport, Mboweni MTEF was destined to plunge the economy to even deeper depths of recession – and thus creating yet another round of a vicious cycle of economic contraction, followed by revenue shortfalls and then more borrowing at rising premium. In the event, the price of this austerity programme was the junk-status downgrade of the country’s sovereign rating by Moody’s, which effectively put paid to the Treasury’s MTEF.
We are disappointed and underwhelmed by the timid stimulation package announced by the President which falls short relative to the necessary amount required for employment-creating and robust positive GDP growth rate. This is on top of the government’s failure to reverse its decision to disrespect and renege on the 2018 public service wage agreement, which is a frontal attack on the hard won gains of workers, particularly those who continue to make sacrifices providing front-line services to our people in saving lives, delivering essential services and enforcing law and order. It is rather bizarre to seek to stimulate the economic growth through borrowing from the (IMF) and some budget reallocations on the one hand, whilst continuing to do the opposite in cutting the public sector wage bill. This can only serve to depress the township and rural economies as many public servants rent accommodation in townships due to their exclusion from housing mortgage lending by the banks. In this regard, we call on the Minister of Finance to prioritise the issue of the payment of salary increases for frontline workers who are busy fight the pandemic when he revises the budget and he must reverse the decision to cut the public service wage bill with immediate effect.
The immediately implementation of the pension-backed Government Employee Housing Scheme would create more than half million new home owners without any additional borrowing by government and a concrete catalyst for the revival of the labour-intensive construction sector. Simultaneously this would have induced other multiplier-effects or spin-offs in the interconnected sectors.
It is strange that amidst massive capital outflows out of emerging economies and South Africa in particular, government and the South African Reserve Bank (SARB) fails to impose capital controls to stem the unfolding devaluation of the domestic assets. We note the increases in the public health expenditure, but unfortunately this is still inadequate given the persisting disparities in terms of the clinical personnel, beds, medical devises and other infrastructure compared to the private health sector. The South African public health system has been neglected for many decades, such that massive resources are still needed if we are to accelerate the implementation of the National Health Insurance (NHI).
The multiple crises we face as a country require innovative, bold, decisive and courageous stance on the part of our government. Unfortunately, the persistent religious adherence to neoliberal orthodoxy, even in the face of such an unprecedented scale of socioeconomic catastrophe, represents a missed opportunity in spiking up the economic growth curve whilst driving the flattening the Coronavirus curve.
Issued by Khaya Xaba, National Spokesperson, NEHAWU, 22 April 2020
